**What Are Trump Accounts? A Simple Guide for Parents**

A new savings program called “Trump accounts” is starting to get attention from parents who want to put money aside for their kids’ future. These accounts were introduced through the Working Families Tax Cuts bill and are being described as an “IRA for kids.” What makes them stand out is that the government will give each account a $1,000 head start — even before families deposit any of their own money.

**When Do Trump Accounts Start?**

You won’t be able to put money into Trump accounts until July 4, 2026. But interest is already growing. Tech billionaires Michael and Susan Dell have pledged $6 billion to support 25 million of these accounts, helping more families get started.

**How Do Trump Accounts Work?**

Trump accounts are similar to traditional IRAs, but designed for children. One big difference: you don’t need to have earned income to contribute. Parents, grandparents, or even employers can add money on behalf of the child.

Here’s how it works:
– The account is locked until the child turns 18.
– No one can take money out early — there are no exceptions.
– Once the child turns 18, they can use the money for anything — not just education.
– If the money stays in the account, it becomes like a regular IRA.
– When the child withdraws the money in the future, they’ll pay taxes on it. If they take it out before age 59½, a 10% penalty may apply unless it qualifies under certain exceptions (like buying a first home or college costs).

**What Can Trump Accounts Be Used For?**

Some people think Trump accounts are only for education, but that’s not true. After age 18, the money can be used for anything — college, a car, starting a business, or retirement. Before age 18, though, it’s completely off-limits.

**How Do Trump Accounts Compare to Other Options?**

There are other ways to save for your child’s future. Here’s how Trump accounts stack up:

– **529 Plans:** These are great for education savings. You don’t pay taxes on growth if you use the money for school. States work with big investment firms like Fidelity and Merrill Lynch to offer these. But you don’t get the $1,000 government boost like you do with Trump accounts.

– **Coverdell Education Savings Accounts (ESAs):** Similar to 529 plans, these also offer tax-free growth if used for school expenses — including K-12.

– **Custodial Accounts (UGMA/UTMA):** These accounts let anyone save for a child. The money becomes the child’s when they turn 18–25, depending on state law. There are no limits on contributions, but they can affect financial aid eligibility and may face gift taxes.

**What Makes Trump Accounts Unique?**

– $1,000 government contribution at the start
– No income required to contribute
– Locked until age 18
– Flexible use after age 18 — not limited to education
– Not tax-free like 529 or ESA accounts

**Final Thoughts**

Trump accounts offer a new way to help kids start saving early — not just for college, but for life. While they don’t have tax-free benefits like some other plans, the $1,000 government boost and flexibility make them worth considering. As 2026 gets closer, many families are starting to plan ahead and explore how this new savings tool can fit into their long-term goals.